Important Thoughts, Financial and Economic Advice

The Democrat-controlled congress intends to raise federal minimum wage to 7.25 USD an hour. Would this step help millions of working poor Whites to improve their lives? Unfortunately this seems unlikely: the measure would probably help no one but illegal aliens, while actually hurting poor American workers.

In economics the role of minimum wage is to protect workers from exploitation by their employers, by providing a floor beyond which a wage cannot go at the level sufficient to cover basic survival needs: modest food, closing and a bed in a shelter (in the developed countries such minimal wage currently stands at 3 USD per hour). While in the long run in economic theory wages that do not allow labor to recreate itself cannot exist, in practice they existed through fraudulent and coercive practices applied to labor by the employers. Hence to protect labor from exploitation in the 20th century minimal wage laws were adopted through civilized world.

Yet minimal wage is not the “living wage”, or the wage that would allow individual middle class standards of living. Economic history is rife with examples when increase in minimal wage beyond its minimal level distorted employment patterns, led to wage-price inflation spirals, and eventually put millions working poor out of work, while destroying their meager savings, hurting those that it was supposed to protect. And primary evidence is appearing that recent congress move will achieve precisely that.

Robert (name changed), a 22 year-old White, works as a cashier in a discount store in a small town, where he earns 7.25 USD per hour or slightly above 15 000USD per year: this money is barely sufficient for him to cover living expenses: he and his disabled parents, with whom he lives in a trailer, incur. His car is bought on credit payable till year 2012; the trailer he lives in is old and deteriorating. He pays 313 USD every month for car loan, 100 USD for car insurance and gasoline, 100 USD for mortgage on a trailer, 100 USD for conveniences; other income goes to food and closing. This job was hard to get; a huge industrial enterprise that previously existed in the town was resold many times, and employs a fraction of its former workforce, and most employers in the town are retailers. If he lost this job he would not know how he would be able to manage loan payments.

Robert’s employer in contrast is upset over minimal wage hike and tells he cannot afford it, to stay competitive with Wall Mart and other big stores. If the minimal wage goes up, he tells, he will have to fire some of the workers. Most Robert’s colleagues’ financial situation is even worse: they are older and in debt, and would have to declare personal bankruptcy if fired with all its implications.

Speaking about its macroeconomic implications, economists estimate that app. 13 mln Americans would get a pay raise, yet at a cost: liquidation of 250 000 to 500 000 of workplaces. Unfortunately, since many live in a subsidized housing, or are in debt, additional income would rarely transfer into additional spending: more likely it would be paid off as debt or repayments of various kinds. The group that is likely to benefit the most are illegals, most without mortgages to pay and little contact with a formal financial system. They would have more disposable income to spend, while the only thing poor White Americans are going to have is even fewer jobs available, and even more fierce competition for them.

So what should have been done to alleviate poverty? Precisely the opposite: minimal wage should have been lowered to 3 USD per hour to increase employment and lower pressure on U. S. manufacturing, while expansive discrete monetary policy, which is the cause of increasing poverty in the U. S., replaced by monetary rule. Such sound economic policy, however, is not even contemplated: it runs contrary to the interests of American democratic elites that want more, not less poverty on their global plantation to exploit.

Recently, I was thinking about the most effective ways to develop WN media, and looked at the available research to determine the correct way to do that. Basically, theory suggests two main approaches to develop them (as political NGOs vs. media conglomerates), with totally different mission strategy, structure and policies required.
A political NGO is an organization, aimed at influencing and/or replacing the existing power structures in the direction relevant to the NGOs purposes. NGOs generally do not charge for the media services they provide, and if they do so, they just recover costs – they are supported by voluntary contributions of their members. A case study of mass media NGOs is the story of Radio Maria, a Polish Catholic media group, modeled after Bavarian Radio Maria Catholic broadcasting network: currently country’s largest. It was formed on the basis of small parish radio stations and newspapers and includes a broadcasting network, a newspaper, a publishing house and recently a tv network, as well as a cluster of affiliated publications, businesses and NGOs around it. It does not charge for its tv programming or broadcasting services, and charges for its newspaper a very small price, that only covers costs, and has many times less funds available that huge American or German international or local lying democratic media conglomerates. Yet it succeeded to grow from a network of small local stations to a biggest media group in Poland, two times bigger in terms of audience than its nearest competitor, being constantly lied about, harassed by authorities, and even intimidated by communist spies and organized crime. What helped Radio Maria to win:

1) Authoritarian ways. Radio Maria is run by top-down hierarchical approach, with all important decisions made on the top, which allows to save time and money, and make quick decisions. A personality of the director is promoted as the Great Man, totally dedicated to its mission, which helps to shed criticism, both internal and external and keep organization stable.

2) Clear mission, purpose and direction. The mission of the media group is to promote Catholic and Polish culture all over the world. The purpose is to raise awareness of Catholic Faith and Polish culture first within the Polish population, and then within other European peoples. The direction is creation of ever stronger and numerous mass media around the group, and to promote people’s voluntary activism. Everyone associated with Radio Maria is constantly told about that and about best ways to do that, and is expected to do just that.

3) Promotion of voluntary cooperation and shunning of compulsion. Radio Maria does not charge money for most of its services, relies on staff volunteers, and does not seek profit out of its ventures. It is supported by voluntary contributions, collected mainly on group’s premises. Since nothing is compulsory, it has an excess of volunteers, the level of donations is constantly rising in line with increase in population’s incomes, and the costs are fraction of that of competitors. The process of allocation of donations is transparent, which enhances media group credibility even more. Even though it has much less funds than other media groups, it still has sufficient funds to cover all costs, develop, finance new educational ventures, and even help industrial enterprises in trouble.

4) Emphasis on quality. Radio Maria’s programs are regularly rated as best in Poland and good even for German media. It is achieved through benchmarking in relation to all competing programs and careful selection of volunteers that work as reporters and managers: while everyone is welcome, only the best are promoted into positions of authority. As the result, when people see quality high products and services, this media group has to offer, they give, and give generously.

5) Brutal honesty, within general framework of organization’s beliefs. The stated policy of Radio Maria is not to lie to its audience, and visiting politicians and other guests are expected to do just that. Some do lie, but then they do not appear anymore. Hence Polish politicians, not always honest, learned to keep silence instead of lying when answering hard questions. In turn, the political discourse is conducted in a professional, friendly and respectful way. Most of democratic, political and social elites abhor the network, but their views are not given too much time, and always countered by the Truth on the matter.

6) Cooperation with and support of friendly politicians and state officials. A politician or a state official, friendly to the media group, knows that he will never be aggressively criticized to gain audience in a crisis, but instead supported and given time to explain his position. As a result more and more politicians and state officials are friendly to a media group, yet, since Radio Maria is a non-profit NGO, nor appearance of corruption exists, while media businesses that tried to emulate this approach sooner or later were accused of corruption.

In contrast, media conglomerate is a business, aimed at maximizing profits that charges maximum possible fee for its products and services. Theoretically, a media conglomerate should be involved in politics only to the degree it helps it to earn money. If this rule is broken it sooner or later declines and looses profitability. A case study of a media conglomerate similar to Radio Maria in its structure and initial position is Agora, which also owns newspapers, magazines, a network of radio stations, a tv network and a publishing house. Agora was created on the basis of a merger of democratic opposition’s newspapers, once most respected in Poland. Agora chose the path of the media conglomerates, turning once unprofitable newspapers into a large country-wide newspaper, with the largest share of advertising revenues, and being once the biggest and most profitable media enterprise on Polish market. Yet currently it is close to bankruptcy, with ever shrinking audience. What factors have contributed to Agora’s decline:

1) General decline in newspapers. With internet readily available, people are nor longer inclined to pay for newspapers or even tv programming. Even putting once pay-based content on the internet free of charge often does not help, it only cannibalizes sales and ad revenues further, yet fails to capture any significant market share of internet readers.

2) Democratic management practices. Agora was run by a journalists’ committee: decisions were made collectively, and many administrative layers existed. All this cost time and money, while the quality of decision-making was low.

3) High prices. Agora’s content was always sold very expensive, e.g. its newspaper was twice more expensive than average price and four times more expensive than Radio Maria’s newspaper, which made it very profitable, yet simultaneously destroyed the mass readership base: the poorest readers switched to a cheapest offering, while the more affluent readers switched to German and American newspapers.

4) Dishonesty. Having the bulk of advertising revenues means that the company had to conduct editorial policy in advertiser’s interest which involves lying to readers. After two or three major lies were told, many people stopped reading and watching it altogether, yet Agora supplied its advertisers with unchanged audience figures. Eventually advertisers figured it out and most of them stopped doing business with company.

5) Corruption. Since the media conglomerate was initially able to attract large audience and best journalists, it soon started to exert a huge influence in politics. As a result, politicians were made and destroyed, the official line was carried out with no concern to the Truth on the matter, and lucrative business deals were made. Soon corruption allegations abounded, which were eventually investigated and confirmed – and Agora got the largest drop in its audience.

6) Excessive profit-seeking. To maximize profits the company engaged in women magazines, men’s magazines, and distribution of erotic and pornographic materials – all that further destroyed the company image as the serious political media-group.

So what conclusions can we draw from all that? First, whether a WN media chooses a political NGO or a media conglomerate approach, it should be consistent in selecting an appropriate mission, purpose and structure: attempts to cherry pick or merge elements from both main approaches would only led to decline of the WN media in question. And second, a political NGOs approach has a proven track record in Europe: Radio Maria’s experience was recently successfully transplanted in France and Portugal; while media conglomerate approach has many pitfalls and often leads to failure. Yet eventually, it is up to American WNs to decide what suits them best: they should carefully evaluate their reporting styles as well as the cultural milieu of the prospective audience, and then select approach that is best for their personalities and the audience.

* * *

An interesting situation is currently forming at forex market, where USD slightly appreciated to USD/EUR 1.29 from USD/EUR1.33 a week ago. There are three main reasons for this:

– ECB refrained from raising prime rate in Europe under pressure from the FRS and national governments.

– China slightly reduced the amount of newly acquired reserves it is converting into euros under pressure from the Bush administration.

All of the reasons are short term, yet their combined effect is likely to strengthen dollar correction, instead of USD/EUR 1.40-1.45 it is likely to be USD/EUR1.45-1.50, since the recession is starting both in the US and Asian economies, which can easily turn into stagflation, given the hugely inflated money supply there. When it is obvious in 1-2 quarters, and giving improved performance of European economies and restrained monetary stance of the ECB, it will trigger an even stronger correction in dollar’s exchange rate in relation to euro. So I am increasing my position in euros by further 50%, and advise respected readers to do the same.

5 Responses to “Important Thoughts, Financial and Economic Advice”

The rise in the minimum wage will be inflationary. But, I don’t see where it will be weighted towards illegal aliens/foreign nationals. If anything it may work to force some aliens without any marketable basic skills out of the labor market, and, south of the border. It may also slow the importation of Asians and Orientals, if coupled with enforcement.

Lenz must be channelling Sombart, Schacht, Speer, and the best of the NSDAP Economic Planning Team.

George Lenz wrote:
So what should have been done to alleviate poverty? Precisely the opposite: minimal wage should have been lowered to 3 USD per hour to increase employment and lower pressure on U. S. manufacturing, while expansive discrete monetary policy, which is the cause of increasing poverty in the U. S., replaced by monetary rule.

in reply:
It’s not often than someone just plain GETS IT, but Lenz nails the Big Picture with a truly substantial insight.

Imagine an economy without debt, except debt that is explicitly linked to a means of liquidation based on economic productivity, without subsidy, such as tax deductions.

Now, go back to 1913, and assume we never got the Federal Reserve – the formation of money created out of debt.

Assume we adopt a national policy that supports economic growth, through industrialization – just for fun.

NOW, assume a THREE PERCENT increase in economic growth, defined in terms of real productivity, and extend that through for, oh,say, a century.

All without debt – except, of course, for the self-liquidating type of debt that we referred to.

You do the math – just do it on the basis of per capital income, and see what a three dollar an hour job would provide you in such an economy.

This seemingly counterintuitive observation ends with an excellent framework for the Big Picture:

George Lenz wrote:
Such sound economic policy, however, is not even contemplated: it runs contrary to the interests of American democratic elites that want more, not less poverty on their global plantation to exploit.

in reply:
It can not get any simpler than that for our “Seven-Eleven” memes:

“I have a simple explanation for the economic situation. The people who REALLY run the country want more poverty for America, and they are giving it – to US.”

Interestingly, Wal Mart heavily supported the increase, figuring that their increased labor cost would be offset by increased spending by customers.

Minimum wage is trying to fix a symptom, which so often means that it has side effects, in this case more jobs will be lost by employees whose jobs don’t produce $7.25 worth of value per hour, as well as those whose jobs did, but this was the final straw for the executives who decide to outsource their factory job to 3rd world to satisfy the profit-hungry shareholders.

I can’t get it out of my mind that inflation is the natural result of the widespread investing in stocks. Everyone trying to outpace inflation by jewing everyone else, trying to maximize what you can get someone to pay for your product. If you don’t outpace inflation by jewing one another or investing in a hedge against it, like gold/silver/real estate, you end up getting screwed like people in the 20s who put their savings under a mattress, which would now be worth maybe 1/10 of what it was. 90+% lost, just through inflation. Barter would seem to be the ideal method of commerce. You don’t have to jew one another, but it weeds out the middle-men parasites.

I am never impressed by ‘Libertarian’ critiques of such obviously necessary market interventions as the minimum wage. These ‘Libertarians’ never explain why the working poor should remain poor forever, generation after generation after generation, so that supranational corporations–which always have the incentive to lower costs, even to the point of paying starvation-level wages–can pocket the difference. Instead they float arguments that don’t mean much in light of the ‘economic elephant in the room’ in the form of Jew-mandated usury. The law of compound interest ultimately destroys every stabilizing force in any economic system in which it takes hold: witness Weimar Germany, and 1930s America.

Also note that small business are, or once were, exempt from minimum wage requirements. Yet these ‘Libertarian’ economists, none of whom do much in the way of real work for a living (since economic ‘philosophy’ is largely a form of mental masturbation), always cite the destruction of small businesses as the inevitable outcome of raising the minimum wage. Not long ago I read an article by a ‘Libertarian’ who argued that Americans don’t deserve to be paid any minimum wage since, after all, being born in a certain place in the world should in no way be connected to what wages one might be allowed to earn. No, ‘Libertarian’ economists are globalists through and through, just as are the liberal economists (like Jew Joseph Stiglitz) and the conservative economists (like Jew Milton Friedman).

American natural and economic resources are the legitimate birthright of those with traditional rights of the soil: That is why nations have borders and immigration policies. Unfortunately, U.S. government bureaucrats– Forest Service and B.L.M.– sold natural resources to giant corporations at below fair market value, for example. The U.S. government rule-made, legislated, adjudicated, and enforced the opposite of common sense in business (read “communism”). The U.S. governement assures actual and virtual open borders. And they fiddle with everything instead of letting nature take its course. It seems to me, too, that you cannot take a libertarian approach of letting some things alone while heavily regulating and subsidizing others and claim you allowing the free market to operate. The first step is, I think, to get an honest monetary system– Cesar’s image off of the tribute money– and stop using the resulting nternal revenue to subsidize internationalists and traitors. And y’all know what that means.

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